Punjab raises cane price despite objection by sugarmills

Chandigarh: The Punjab government on Tuesday decided to raise cane price by Rs 5 per quintal for crushing season (2014-15), even as private sugar mills asking the state government not to go ahead with the price hike.

With cane crushing set to start from November 20, Punjab government on tuesday raised State Agreed Price (SAP) of early, medium and late varieties of sugarcane by Rs 5 per quintal.

The decision to raise cane prices was taken by Punjab Chief Minister Parkash Singh Badal here on Tuesday. Significantly, the state government had raised cane prices substantially by Rs 40 per quintal during the last crushing season.

With this hike, the SAP of early, medium and late varieties of sugarcane in Punjab would now be Rs 295, Rs 285 and Rs 280 per quintal respectively for the crushing season of 2014-15.

During previous crushing season, the cane prices in Punjab were Rs 290, Rs 280 and Rs 275 per quintal respectively. Notably, Punjab-based private sugar mills had asked the state government not to raise SAP of sugarcane for 2014-15 crushing season, saying low sugar prices hit the industryhard.

Sugarmill owners had pointed that there was no "viability" in running sugar mills as there were very high rates of cane in the state while current sugar prices were lesser than input cost.

Mill owners under the banner of Punjab Private Sugar Mills Association had rued that the state government had raised cane prices substantially by Rs 40 per quintal last year, which had led to financial loss of Rs 30 crore to Rs 50 crore per sugarmill.

Private sugarmills owners had said that industry's input cost from producing sugar was Rs 3,600 per quintal but the wholesale sugar prices were ruling at Rs 3,200 a quintal.

They had also sought rollback of purchase tax on cane in Punjab. A total of one lakh hectares of area is under sugarcane in Punjab, with cane production and sugar estimated to be 720 lakh quintals and 48 lakh quintals respectively for 2014-15 crushing season here are 16 sugar mills, including seven in private sector in Punjab, with crushing capacity of 49,766 tonnes crushing per day.